Lahore, December 14, 2021 (PPI-OT): The ratings reflects the Company’s association with Mega and Forbes Group of Companies, an established group with presence in energy, cement, shipping, logistics, real estate development and food sectors. Mega Conglomerate (Pvt.) Limited (Mega) operates under a holding company structure with an aim to acquire and consolidate some of the group’s investments in energy, real estate and food sectors. The rating incorporates the Company’s sizable holding in The Hub Power Company Limited and stake in Haleeb Foods (through Mega Foods (Pvt.) Ltd.), investment properties (through Imperial Developers and Builders (Pvt.) Ltd.) and bill aggregator services (through Paypro (Pvt.) Ltd.).
The Company primarily drives income from dividend stream of underlying investments. The profitability and margins are relieved due to dividend inflow emanating from HUBCO. The Company incurs high financial charges from the debt acquired for financing the investment portfolio. The Company is highly leveraged, however, the debt is fully backed by liquid investments and securities including HUBCO shares. The equity base is strengthened on the back of equity injection and subordinate loan from sponsors/group companies. Going forward, consistent dividend stream, which has been augmented from investments in energy sector, is expected to support the financial profile.
Moreover, ratings draw comfort from presence of sufficient liquid investment, in form of TDR’s and TFC’s, on the Company’s balance sheet and expected support from sponsors, if required. The ratings are dependent on the performance of existing strategic investments and execution of their envisaged business strategies resulting in regular dividend stream. Strengthening the governance framework would be important for the ratings.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com